Five Things Christians Need to Know about Income Inequality, and What You Can Do about It

Income inequality is once again at the forefront of conversation for many people. As Jay Richards and Elise Amyx wrote on Monday, the subject is receiving renewed emphasis in the president’s upcoming State of the Union address.

Bringing about flourishing through good stewardship requires discerning the biblical principles that will lead us to understand whether income inequality is a problem, and if so, how we are to respond.

The best way to summarize this tough topic is through these five points that are critical for Christians to understand in order to bring about greater flourishing, especially for the poor.

1. How Income Inequality is Measured

Income inequality measures the income differences across groups of people using a statistical tool called the Gini coefficient. It ranges between zero and one. A score of one indicates perfect inequality (one person makes all the income and everyone else makes zero). A score of zero indicates perfect equality (everyone earns the same amount).

The US Gini coefficient is .45 according to the CIA World Fact Book. For the sake of context, Bangladesh has less inequality than the US (Gini of .33) and Hong Kong has slightly more inequality than the US (Gini of .54). Alone, income inequality data doesn’t tell us that much about whether one country is “better” than another.

2. Cronyism makes income inequality worse, and it’s unfair.

Cronyism occurs when corporations pursue the government for benefits, protections, or subsidies benefiting their business at the expense of competing firms and consumers. It is a growing trend evidenced by the hundreds of lobbying firms popping up on K Street. Politicians have responded quite favorably to these lobbying efforts and have created a culture in which the most well-connected win.

This is inherently unfair. An unjust system is prevailing where ordinary businesses and entrepreneurs are failing because they lack the resources to buy off politicians. The unfortunate result is that they can’t succeed, and the well-connected rich get richer and stifle more opportunities for the poor.

3. Diversity is a biblical premise of creation. We are born with different gifts, resulting in different incomes.

We are created in God’s image (Genesis 1:27) and, while we bear many physical similarities, we are all distinct. That means that by definition we are unequal. God knew that our uniqueness makes our work and talents inherently dignifying and brings us into community with one another. Our interdependence makes us able to achieve things we never could on our own.

We use our gifts and skills to provide goods and services that others need. We then trade for goods and services that we need but aren’t able to provide ourselves. The market return for our services is our income, and that income is predicated upon the relative scarcity of what we provide reconciled with the value consumers place on it.

This means that our incomes will be different. However, because we do not operate in a vacuum, those who do earn high incomes tend to create lots of value for everyone, including lots of job opportunities. High incomes are not a sign that the rich stole from the poor. Quite the contrary, wealthy individuals have often innovated products and services that make us all richer and ease our way of life.

4. Income mobility is a better measure of prosperity.

Income mobility is quite different than income inequality. Income mobility tracks the lifetime income of a person. It’s a way of understanding if people are able to earn more income over their lives as a result of increases in their education, skills, and productivity.

The trouble with the data on income inequality is that it doesn’t track individuals. If we look at the poorest income bracket in 1990 and again in 2014, we have no idea if the people who were poor in 1990 are still poor today simply by looking at the data. In fact, mobility data suggests that almost sixty percent of individuals who were in the lower income quintiles move into higher quintiles in under a decade.

5. We should focus on what God has called us to do, not on what others are doing.

In a flourishing society there are going to be lots of people who make high levels of income. Think how different the Congo or Vietnam would look if local entrepreneurs had the opportunity to create and innovate. The world would have a lot more people like Bill Gates and a lot more wealth and opportunity for all – not just the rich.

It’s easy to want what others have for ourselves, but we can’t all be Bill Gates. God has gifted each of us to do something specific and special. We need to focus on our unique callings and do them with excellence rather than focusing on what others have. Unfortunately, some of the talk around income inequality is about coveting what others have rather than wanting more for the poor. I can tell you from living in a county with the highest per-capita income in the country that it is easy to want what others have: the newest car, the bigger house, the better wardrobe. It is a deceptive trap to believe that if we have these things, we will feel better or live better.

What can you do about income inequality?

Government is increasingly giving in to the entitlement culture of lobbying. We need businesses to stop asking for favors and political leaders who will stop the handouts.

Furthermore, prayerfully discern the path to which God calls you and pursue it with integrity, hard work, and faith. No matter what income it brings, it gives you a chance to serve others in the here and now and achieve everlasting significance for God’s kingdom.

Dr. Anne Bradley

Anne Bradley, Ph.D. is Vice President of Economic Initiatives at the Institute for Faith, Work & Economics and the George and Sally Mayer fellow for Economic Education and Academic Director at The Fund for American Studies. She served as co-editor and contributing author to IFWE’s Counting the Cost: Christian Perspectives on Capitalism (Abilene Christian University Press) and For the Least of These: A Biblical Answer to Poverty (Zondervan). Anne received her Ph.D. in Economics from George Mason University. She is a visiting professor at Georgetown University and has previously taught at George Mason University and at Charles University in Prague.

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It is difficult to use Gini coefficients as a comparative measure when the years for the Gini coefficients cited above are for different years. The US Gini score was for 2007. The question becomes, has income inequality become worse especially since after the economic crash and recovery?

And though income mobility is an important statistic to gain, where people start is also important. That is because it might be an indicator of future income mobility.

Finally, point #5 is only half correct. The OT prophets not only told Israel and the surrounding nations what social sins they were committing, imitating them is commanded (Isaiah 1:17) and defines what it means to know the Lord (Jeremiah 22:16). Christians should be preaching repentance for all sins, whether they be personal or social. Also, paying workers poverty wages is a form of theft by the rich and note that has nothing to do with cronyism (see James 5:1-6 regarding the future of the rich who steal from their workers). That must be confronted and changed.

Robert Cihak, MD

At http://politicalcalculations.blogspot.com/search?q=gini#.UuFo2_vTnlw “Political Calculations, December 4, 2013, The Major Trends in U.S. Income Inequality Since 1947” Political Calculations compares the Gini ratios for American persons, families and households, from 1947 to 2012. While the ratios for families and households have increased, the ratio for persons is essentially unchanged since 1960. Very interesting data and analysis.